It is understood that ASIC blocked a website suspected of fraudulent financial activities in April, but as a result accidentally blocked 1200 websites between April 4 and April 12, according to tech website Delimiter.

UPDATE: The website of independent learning organisation, Melbourne Free University was blocked for six weeks, during which time it had no recourse to find out why, its co-founder Jasmine Westendorf said.

The university said it was informed by its ISP Exetel that its website had been blocked by Australian authorities.

"The Attorney General's office, ACMA, and the AFP all said they weren't involved but they still couldn't or wouldn't give us any information about why we were blocked," she said.

"This is a significant political issue that this can happen and there was almost no way to get answers."

It was only because the university was able to mobilise groups like The Greens and Electronic Frontiers Australia to investigate on its behalf that it was able to get any answers, Ms Westendorf said.

"We're not a small business but if we had been we would have no money coming in over that time and no way to get answers," she said.

"It's all well and good for them to say that Senator Conroy's office is working with ASIC to make sure it doesn't happen again in the future to make sure blocks are properly processed but I don't feel they can guarantee that."

"The people at ASIC clearly don't understand what they're doing," he said. "Which is alarming in its own right."

"It plays into the fact that blocking websites is a really ineffective way of doing things. And clearly in this case IP address blocking had very big collateral damage. Its untested use of the law could lead to a potentially completely unregulated internet filter by itself," he said.

A spokesperson for ASIC admitted that it accidentally caused non-fraudulent websites to be censored and was reviewing its processes to ensure it would not inadvertently impact innocent websites.

It said it had exercised the power extended to it by the Telecommunications Act "numerous times over the past nine months".

"This is the first time we have encountered this problem. We are reviewing our processes to ensure this doesn't happen again," the spokesperson said.

Stephen ConroySource:The Australian

ASIC conducted investigations into at least 17 cases of cold calling 'Boiler Room' fraud amounting to in excess of $8 million in losses to Australian investors between September 2009 and April 2013, the spokesperson said.

"Most of these scams include access to fraudulent financial services websites that are used to lure potential investors. ASIC is working to shut down scams and educate potential victims. We also provide warnings on our website MoneySmart.gov.au."

Section 313 of the Telecommunications Act requires ISPs to do everything in its power to prevent its networks from being used for criminal activities.

Rohan Wenn, national communications director at GetUp, told news.com.au that it was “deeply concerning” that ASIC used the Telecommunications Act to block fraudulent websites.

"Section 313 (in the Act) cannot be allowed to become a pseudo internet filter run by a Government agency like ASIC," he said.

"Who decides which sites get blocked and why? Is ASIC a law unto itself in these matters? Where is the oversight?

"These seem to be extraordinary powers that have been granted to ASIC with very little accountability."

internet security 2Source:Supplied

A spokesperson for Senator Conroy told news.com.au that ASIC "made an error by requesting carriers to block access to the hosting IP address rather than the domain name".

" As soon as ASIC recognised the consequence they removed the request," the spokesperson said. "The government is working with enforcement agencies to ensure that s.313 requests are properly targeted in future."

Peter Lee, the chief executive of the Internet Industry Association of Australia, said there was not enough transparency about how ASIC went about protecting the public from online scams and it would pursue the issue with the Federal Government.

However, Holly Raiche, research Fellow at the Cyberspace Law and Policy Centre at UNSW and a policy committee member of the Internet Society of Australia told news.com.au that she "didn't have an issue" with ASIC blocking fraudulent websites.

"In the ASIC case, it appears it was used to block sites that may have been the site of fraudulent activity," she said. "While I am highly critical of the lack of language to ensure that such assistance is only given when there are reasonable grounds for doing so, I don't have an issue with it."

Scott LudlumSource:Supplied

Greens MP Scott Ludlam said that after abandoning its mandatory web filter last year "We now know the Government has introduced a filter by stealth, one that has already caught 1200 perfectly legal websites in its net," he wrote in a blog post on his website.

"The Government needs to abandon this scheme and come up with methods to tackle online fraud that don't involve widespread censorship of harmless material," he wrote.

Last November, Senator Conroy declared the Federal Government’s mandatory internet filtering scheme as “dead”, and instead supported Aussie ISPs voluntarily blocking “the worst of the worst” child pornography websites listed by international police agency, Interpol. The ISPs use the protections offered in the Telecommunications Act to block the websites listed by Interpol. The Act allows the Australian Federal Police to notify telcos that it needs their assistance in upholding the law.

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